U.S. Rep. Cathy McMorris Rodgers (R-WA) joined four of her Republican colleagues in requesting an analysis of the Medicare Part D Premium Stabilization Demonstration program, which they say intends to use taxpayer funds to mitigate adverse consequences from the Inflation Reduction Act (IRA).
“We are concerned that a new rushed demonstration program will result in an unchecked taxpayer-funded bailout to paper over the flaws in the IRA,” wrote Rep. McMorris Rodgers, House Energy and Commerce Committee Chair, in an Aug. 26 letter sent to Congressional Budget Office (CBO) Director Phillip Swagel. Also signing the letter were Senate Finance Committee Ranking Member Mike Crapo (R-ID), Senate Budget Committee Ranking Member Chuck Grassley (R-IA), House Budget Committee Chair Jodey Arrington (R-TX), and House Ways and Means Committee Chair Jason Smith (R-MO).
The IRA included several provisions that redesigned the Medicare Part D prescription drug benefit at an estimated cost of nearly $30 billion over 10 years, the members wrote, noting that the policy changes restructured the Part D market.
In turn, prescription drug plan (PDP) sponsors are responding by increasing seniors’ premiums and reducing plan choices.
On July 29, the Centers for Medicare and Medicaid Services (CMS) then introduced a new Medicare Part D Premium Stabilization Demonstration program that Rep. McMorris Rodgers and her colleagues wrote “will shift financial liability away from large health insurers and onto American taxpayers.”
Specifically, the program applies a uniform reduction of $15 to the base beneficiary premium, establishing a year-over-year limit of $35 on how much a plan’s total Part D premium can increase, and adjusting risk corridors to shift financial liability from those insurers to taxpayers, according to their letter.
“Additionally, CMS claims demonstration participation by PDP sponsors is voluntary and will last up to three years, “with parameters to be adjusted to reflect market conditions and variation in those years,” opening the door to significantly increased future federal spending and market instability resulting from the policy uncertainty,” Rep. McMorris Rodgers and her colleagues wrote.
“Furthermore,” they wrote, “the bailout is only available to stand-alone prescription drug plans, creating a policy imbalance between such plans and those financed by employers and Medicare Advantage organizations.”
The members requested an analysis on the budgetary impact of this new demonstration program and asked Swagel to answer several questions, and to provide a detailed breakdown of the estimated budgetary effects for the new Premium Stabilization Demonstration for plan year 2025.
They asked the CBO director to provide responses no later than Oct. 1.